I am author of the book "Caring for Our Parents" and resident fellow at The Urban Institute, where I am affiliated with the Tax Policy Center and the Program on Retirement Policy. I also write a tax and budget policy blog, TaxVox, which you may read at Forbes.com or at http://taxvox.taxpolicycenter.org/ Before joining Urban, I was a senior correspondent in the Washington bureau of Business Week.

The Good and Bad News About Aging in Place

Government funding for programs to support aging in place was still growing through 2008, but much more slowly than in the past. At the same time, states were making it harder to enroll, limiting benefits, and forcing people to wait longer before they could participate in these programs. And all that was happening before Medicaid home care faced major budget cuts in the face of the Great Recession and the collapse of state tax revenues.

A new study by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured found that while overall spending on home and community-based services grew from $17 billion in 1999 to $45 billion in 2009, the rate of growth slowed sharply after 2004. Annual home and community payments rose by an average of more than 13 percent from 1999 to 2004, but by less than 9 percent since. And in 2008, funding increased by only about 7 percent.

Despite this shift to home-based services, less than half of the program’s dollars were geared to these benefits in 2009, when 57 percent of Medicaid dollars still went to nursing home care.

Kaiser found the same pattern with enrollment in home care programs. In 2008, the most recent year studied, about 3.1 million people received government home care benefits. That was up a bit from 2.9 million in 2007 but, just as with funding, the growth of enrollees has been also slowing dramatically. From 1999 to 2004, the number of home care participants increased from 1.9 million to 2.7 million, or about 7 percent annually. But from 2004 to 2008, annual enrollment grew half as much, or by just 3.75 percent.

Perhaps most troubling, states have been making people wait longer to enroll,even after they become eligible for home care benefits. In 2010, according to Kaiser, more than 400,000 people were waiting to participate in home-based programs in 40 states, and the average wait was almost two years. These wait times vary by disability so children with developmental disabilities can go 3 years before receiving benefits, while the elderly must wait “only” nine months on average.

Keep in mind Kaiser was looking mostly at 2008, just as state revenues were beginning their nose dive. In the years since, as states have struggled with their budgets,they trimmed their Medicaid programs even more. Based on my conversations with state Medicaid officials and from news reports, these cutbacks got even worse over the past year.

These extra cutbacks were caused by several factors: In 2009, Congress increased the federal share of Medicaid spending to ease the burden of the recession, but that money ran out last July. In addition, as high unemployment has forced more young mothers into Medicaid medical care, the program has been forced to reduce its long-term care funding.

And while the 2010 health law includes incentives to encourage states to expand their home care programs, many have been unable to take up the offer since they don’t even have the funds to contribute limited funding. For example, while the federal government is willing to pay up to 90 percent of the cost of some of these programs, state Medicaid programs don’t have the funds to pay their 10 percent match. Even worse, deep staff cuts have made it difficult for states to even manage new home care benefits.

As I have written frequently, the story of Medicaid long-term care (both for home and nursing facility care) is going to be one of increasingly constrained government resources. The Kaiser study shows that even when times were good, home care was starting to pay the price.

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